Everything You Need to Know About Cleantech

The demand for cleantech is on the rise. We are constantly searching for cleaner and more efficient ways to store energy, and more sustainable solutions in agriculture, waste management and transportation.

This call for renewable sources of energy has birthed new technologies. The most famous examples of clean technology being electric cars, solar panels, wind, and wave energy. But energy isn’t the only cleantech sector changing our planet for the better.

This article covers the definition of cleantech, an introduction to the industry and the investors involved, the sectors making the biggest impact, and finally the most innovative startups in the industry today.

What is cleantech?

Clean technology encompasses more than just a Tesla. It’s a vast growing industry that encompasses multiple sectors like energy and power, transportation, water and waste management, agriculture and biofuels.

But what exactly is clean technology, and what does it mean for the future of our planet? It’s one of the most disruptive industries, and it is difficult to define as it covers multiple technologies.

CleanTech.Org defines cleantech as a term that is “often used interchangeably with the term Greentech, [cleantech] has emerged as an umbrella term encompassing the investment asset class, technology, and business sectors which include clean energy, environmental, and sustainable or green, products and services”.

VC and corporate investors put over $25 billion towards the funding of cleantech and energy startups during 2006-2011, with more than half of that capital being lost. But how did this happen?

Peter Thiel, an investment partner and angel investor has spoken openly about the cleantech bubble of the late 2000’s. At the time, hundreds of eager entrepreneurs were opening cleantech startups. The investments were pouring in. But instead of turning into a worthwhile investment, it turned into a bubble that inevitably burst.

This “re-emergence” of early-stage investment is mainly due to the increase in demand for cleantech solutions, and the maturity of the technology involved. It’s now closer than ever to commercialization.

Even though the investment from venture capital and private equity has seen a decrease of 38%, the lowest since 2005, it has become popular for energy companies to acquire or partner with energy storage companies. Partnerships with companies like Engie and Google, and public-private partnerships are increasing and it’s opening alternative streams of revenue for companies.

About: NTEC was founded in 2002, and was created to plays a role in helping major stakeholders with technology needs in Kuwait. The company is fully owned by the Kuwait government and focuses on many industries within cleantech.

About: This particular VC firm is made up of a group of entrepreneurs who’s goal it was to create the ideal firm in their eyes. They are currently involved in around 60 ventures in numerous technologies as well as cleantech startups like Autogrid. Autogrid organises energy data with big data.

About: Echoing green takes the millennium goals seriously. They define themselves as a “social innovation fund that acts as a catalyst for impact”. They’ve been active for the past 30 years and have invested in companies like Concord Spirits who are working towards creating a spirits that have low carbon emissions.

About: PRIME Coalition is a public organisation that partners with philanthropic investors that invest charitable capital. These partnerships are centred around companies that are working to combat climate change, with a likelihood of achieving success on the commercial market.

About: This particular accelerator was formed to address the lack of investors for early-stage agriculture technology companies (AgTech). Recent investment in Agtech company RootWave with Seed Round of $1M.

About: G2VP is the reincarnation of the well known investment company, Kleiner Perkins. They've unloaded a much needed large fund to the cleantech sector, raising $298.15. This staggering amount was oversubscribed by 17.5% of the funds initial targets.

About: This large and global VC firm invests in technology and healthcare. They have offices located across America. Their portfolio ranges from seed investment, early-stage and even in market leaders. They have created the "$130 early-stage energy fund" known as Green Bay Ventures.

About: This firm, like others, has been birthed out of a need for more skilled energy focused investment firms. They successfully invest in "new breed" energy technology companies, specifically early-stage startups.

About: The French VC firm invests in European biotech and cleantech. Although the company does have a second office in Menlo Park, California. The US counterpart focuses mainly on biotech, with 20% of their funds going towards Europe.

An introduction to the cleantech industry

The Industry Today

The race to lessen the effects of climate change on the environment is ever increasing, and the global investment towards clean technologies is pushing the cleantech industry towards becoming a trillion dollar industry.

According to Bloomberg, the industry has been on the decline in the past four quarters. Even so, the market is huge. In 2014, the market value of the cleantech sector soared to $601 billion, and it’s expected to increase to $1.3tn by 2020, according to the global consultancy firm Frost & Sullivan. And by 2022, it’s expected to double to $2.5 trillion. That’s a pretty huge leap in the space of two years.

The forecast market size of cleantech.

Who’s leading?

The Asia Pacific will continue as the leader in clean energy, as visible from China and India’s heavy investment in the cleantech sector. Their shift towards clean energy solutions has risen, in part, due to the global concern over energy security, especially in the Asian Pacifics.

Air pollution in China in early 2018. Photo from Berkeley Earth / CC BY 2.0

Rapid growth is taking place in China as they tackle their fossil fuel dependence and over pollution. And this will start with a realignment of their economy, steering away from coal and oil and moving towards clean energy.

The bar chart depicted below shows the top ten ranking countries in terms of their input and output of innovation in cleantech.

Input factors – The input innovation takes into consideration the government policies, public R&D spending, access to private financing, the infrastructure in place for renewables, and the industry organizations in cleantech.

Output factors – The output factors factor in the evidence of emerging innovation with early-stage private investments, the number of high impact companies, and environmental patents. It also analyses the cleantech imports and exports, renewable energy consumption, late-stage investment and exits, and the listed cleantech companies and employees.

The input and output factors that are used to determine the most innovative countries in cleantech

Let’s break that down

Countries that rank high on the innovation index do so as they are progressively innovating in cleantech by:

a) tapping into the global demand for renewables and other cleantech,
b) connecting startups with channels to increase their success rate, and
c) increasing the international engagement across the industry ecosystem

The top ten global innovation index leaders.

It’s no surprise that Denmark comes out on top due to their overwhelming efforts to turn Denmark into a ‘Clean Capital’. But they are not the only contender. Poland rose 13 places to position 24 because of its increased spending in cleantech R&D.

Of the 40 countries listed, Russia and Greece came in the last place. Russia’s low rank was in part attributed to their heavy focus on their natural resources which they have in abundance. And Greece’s tough austerity measures (taxes placed on solar generators) placed them low on the list.

How do we increase innovation?

We’re all clued up on the environmental impact of global warming, and we’re in deep need of de-escalating the already existing effects of a temperature rise on the environment.

Countries need to band together in order to accelerate growth in R&D and cleantech innovations within a relatively short period of time. This means that products and services offered by newer start-ups are going to have to scale up, and fast.

They don’t have the resources larger corporates have in order to pull off a scale up, and often, they end up failing due to lack of correct resources. This is why we’re beginning to see larger corporates and investors partner with smaller startups, especially within cleantech.

More collaborations between larger companies, accelerators, investors, and entrepreneurs are incredibly valuable to startups. That’s why matchmaking tools have become a vital tool in the latter part of the 21st Century.

A look into the Valuer matchmaking platform.

So if you’re a corporate, it’s crucial to stay up to date with smaller startups that make large breakthroughs and are able to find the newest and most exciting technologies.

Partnerships between larger corporates, investors, and accelerators with startups are where the future of this budding industry lie.

Emerging startups in developing countries also have the positive effect of bringing jobs and growth. Latin America and Africa show the most potential in this respect, with their potential market sizes averaging

And if you look at the statistics on the growth of the market, we’re getting there.

Commercialization of cleantech

It’s also important to note that innovation and the collaboration/merges between startups and corporates have a very positive effect on the market. And countries investing in innovation, for example, R&D and policy changes benefit greatly from the commercialization of cleantech.

The sectors involved

The top sectors in the cleantech industry ranked by size.

Cleantech is a huge market and it covers industries far and wide. And there are industries within cleantech that are advancing at a rapid pace. The main sectors involved fall into the following categories:

Of these sectors, there are three that are getting the most attention in terms of funding, and you’ll notice that the majority of startups mentioned fall into one of these three categories.

Energy & power, agriculture & food, and mobility & transportation.

Energy & power

Photo from Ensia / CC BY 2.0

Energy and power can be divided into a number of sub-sectors:

Solar power

Geothermal

Wind energy

Ocean energy

Hydropower

Energy storage

Energy efficiency

Energy infrastructure

Of these sub-sectors, wind and solar are the dominating market forces. Solar energy is continuing to decrease in cost and is the dominating player in the market. Its growth has been attributed to a number of factors:

The increase in pollution,

The government incentives and tax rebates for the installation of solar panels,

The surge in rooftop installations, and

The increased application of solar technology in architecture.

It is no wonder that solar energy has become so popular. It is low cost and deliverable at scale and takes a relatively short time to erect, and venture capital is bringing solar power to the mainstream. With increased investment in R&D, the demand for solar is expected to rise.

The biggest sector is wind energy in term of the dollars invested. The global industrial demand has increased due to the private wind farms. Wind turbines are also able to produce power in turbulent conditions, making them appealing to countries with adverse weather conditions. They are also easy to operate and generally low cost to maintain.

Agriculture & food

Photo from Geospatial World / CC BY 2.0

This sector is rapidly growing and it is attracting an increasing amount of venture investment. It’s risen to $1.5 billion in 2017 from $200 million in 2007. And while such an increase can seem like a positive, it is concerning experts who are worried that the current investment trend will head in the same direction as the cleantech crash.

But VCs continue to pay attention to the food and ag-tech startups, like Farmers Edge, that are ripe to disrupt. This is a tricky industry though, as it is not dependent on technology. Processes can be enhanced with it, but it is up to the unforgiving nature of weather and global warming to decide the ultimate result of crops.

Transportation

Photo from Charge point / CC BY 2.0

Transportation is rapidly evolving. Fluctuating and unpredictable oil prices, over pollution leading to stricter regulation, and over population are all contributing factors.

Investment (firm?) Village Capital sees this sector as a rich opportunity with aviation, electric transportation, mass transportation and the sharing economy being just some of the high potential areas involved.

This is great news for startups, as Aviation is racing to create zero-emission technology and it is fuelling the partnerships and investments between corporates and startups. And there is a surprising leader for the highest number of electric vehicles (EV) on the road. China’s subsidiaries on EV’s has helped contribute to the 650,000+ on the road.

The cleantech startups

The most prominent startups in clean technology don’t just fall into one specific sector. There is an intersection between industries. What you will notice from the list below is the strong presence of the Internet of Things (IoT), with lots of the energy platforms being enable by IoT.

About: AeroFarms is changing the way we farm. They are the world largest vertical indoor farm. Their aeroponic growing systems are capable of growing plants without the need for sun or soil. They recently earned a huge chunk of funding in their Series D for $40.5M.

About: AgBiome is creating innovative products for agriculture using new knowledge in the microbiome field. One of their main products has been produced to overcome the growing pesticide resistance. They have partnered with multiple agriculture companies.

About: Airthium is using alternative ways to store excess wind and solar energy by using low cost thermodynamic energy storage systems. Their modules have a 25 year life-cycle, and best of all they are 100% recyclable!

About: This slightly older startup creates renewable products that reduce the lifecycle emissions by 80%. All products are created using natural and sustainable sources. They are also partnered with the Bill & Melinda Gates Foundation.

About: A startup based in India that is focused on selling and designing electric scooters. They have also created a vast network of AtherGrid charging stations. They've amassed a total of $59M in four funding rounds.

About: Blue Pillar is an older startup whose IoT platform is the first solution to connect behind-the-meter DERs by self-prescribing secure IoT networks that enable real-time asset control and energy data.

About: This British based startup helps organisations to manage and reduce their carbon emissions. With offices in Edinburgh, Bangalore (India), and Quito (Ecuador) they have helped large clients like Pfizer Pharmaceuticals and Edinburgh Airport.

About: The Belgian company provides a software called the Smartpower Suite and is the backbone to smart microgrids. Their platform using machine learning algorithms to analyse energy use and adapts to usage, resulting in significant energy savings.

About: This Canadian based startup focuses on agriculture precision farming. Their IoT enabled platform allows farmers to make informed decisions with real time information with farm sensors, historical data, and data management.

About: This company has not yet completed a commercial launch, but is set to launch in the second half of 2018. It's a design and innovation company that specialises in energy conservation and solar technology.

About: Swedish based water technology company is significantly reducing water consumption. They are saving energy and water usage with their recirculating system that essentially treats the water in a miniature waste water treatment site for showers using smart technology.

About: Pyka using autonomous planes making the application of chemicals to crops faster, safer, and more precise. Their product is also affordable, allowing smaller farms to benefit from the technology.

Conclusion

The cleantech bubble of the 2000s rocket the investment world, and for a long time, cleantech was not getting funding. But the increasing demand for clean technologies and rise in the commercialisation of the industry could make way for a new age in cleantech.

Whether or not we learned our lesson remains unanswered. But one thing remains certain. The need for more sustainable technologies that help sustain our nurture our planet are more important than ever.

Scientists have long been warning of the consequences of a temperature increase, but new studies reveal that we need to up the anti. Keeping to goals we set for 2030 is no longer enough to curb the effects of a temperature increase. We’re running out of time.

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Valuer helps corporations, accelerators, and investors find “high potential” startups that specifically fit the corporation’s strategic innovation requirements. In order to achieve this, Valuer developed a platform that uses crowdsourcing and artificial intelligence to detect, predict, evaluate and select startups that are particularly relevant to large companies.